100+ Free CBI Practice Questions

Pass your IBBA Certified Business Intermediary (CBI) exam on the first try — instant access, no signup required.

✓ No registration✓ No credit card✓ No hidden fees✓ Start practicing immediately

~60-70% Pass Rate

100+ Questions

100% Free

1 / 10

Question 1

Score: 0/0

In business brokerage, a Confidential Information Memorandum (CIM) is used to:

Solicit media coverage of the sale

Provide qualified, screened buyers with detailed information about the business for sale

Replace the purchase agreement

Advertise the business publicly

to track

2026 Statistics

Key Facts: CBI Exam

100

Practice Questions

OpenExamPrep

70%

Passing Score

IBBA CBI Exam

60 hrs

Course Content

IBBA CBI curriculum

$650-$1,200

Exam + Course Fee

IBBA (member)

3 years

Recertification Cycle

CEUs required

Online

Testing Format

Year-round at test centers

The CBI is IBBA’s flagship credential for professional business brokers and M&A intermediaries. Candidates complete IBBA coursework, pass the exam at 70%+, commit to the Code of Professional Standards, maintain membership, and recertify every 3 years via CEUs. Typical total cost is $650–$1,200 for exam plus course fees; the Fast Track program bundle pricing varies by year. CBIs work primarily on Main Street and lower-middle-market transactions (roughly under $5M enterprise value for most, extending into $50M+ with M&AMI specialization).

Sample CBI Practice Questions

Try these sample questions to test your CBI exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1In business brokerage, a Confidential Information Memorandum (CIM) is used to:

A.Solicit media coverage of the sale

B.Provide qualified, screened buyers with detailed information about the business for sale

C.Replace the purchase agreement

D.Advertise the business publicly

Explanation: The CIM (also called a Confidential Offering Memorandum or Descriptive Memorandum) is shared with qualified buyers after they have signed an NDA. It summarizes the business (operations, financials, market, opportunity) at a level of detail suitable for a preliminary bid but does not reveal the most sensitive competitive information.

2Seller’s Discretionary Earnings (SDE) is most commonly used to value:

A.Fortune 500 companies

B.Owner-operated small businesses, especially Main Street transactions

C.Publicly traded companies

D.Infrastructure assets

Explanation: SDE (historically called Seller’s Discretionary Cash Flow) adds back the single owner’s salary, personal expenses, and one-time items to EBITDA. It is the predominant earnings measure in Main Street (small, typically owner-operated) business sales. EBITDA predominates as businesses become larger and more institutional.

3EBITDA stands for:

A.Earnings Before Interest, Taxes, Depreciation, and Amortization

B.Earnings Before Investment, Taxes, Depreciation, and Adjustments

C.Earnings Before Investor Transactions

D.Earnings and Basic Income Tax Deductions

Explanation: EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortization. It approximates cash earnings generated by operations before financing and capital-structure effects, making it widely used in M&A and business valuation.

4Which is typically a legitimate add-back when normalizing earnings for a small-business sale?

A.Ongoing replacement capex

B.Regular marketing expenses

C.Above-market owner compensation

D.Ordinary rent paid to an unrelated landlord

Explanation: Add-backs reflect non-recurring, non-operating, or owner-discretionary items: above-market owner compensation, personal expenses run through the business, family-member pay that wouldn’t transfer, one-time legal or litigation settlements. Recurring operating expenses (replacement capex, normal rent, normal marketing) are not valid add-backs.

5The primary professional association for business brokers in the United States is the:

A.NAR (National Association of REALTORS)

B.IBBA (International Business Brokers Association)

C.NACVA

D.FINRA

Explanation: IBBA is the principal U.S. (and internationally recognized) association for business brokers and M&A professionals serving Main Street and lower Middle Market businesses. CBI is IBBA’s flagship certification. Middle-market-focused brokers often also hold M&AMI or similar credentials.

6An exclusive right to sell engagement means:

A.Any broker can sell the business and claim commission

B.The engaged broker earns commission regardless of who procures the buyer during the engagement

C.The seller can find a buyer without paying

D.The buyer pays the commission

Explanation: Under an exclusive right to sell, the broker is entitled to a commission on a sale within the engagement term regardless of who sources the buyer (including the seller themselves). Exclusive agency allows the seller to find a buyer without commission. Open listing allows any engaged broker to earn the commission, but only the one who procures the buyer.

7A Letter of Intent (LOI) is typically:

A.A binding purchase agreement

B.A non-binding outline of key deal terms with certain binding provisions (exclusivity, confidentiality)

C.A wire transfer

D.A regulatory filing

Explanation: An LOI outlines the key commercial terms (price, structure, key conditions, timeline) before a definitive agreement is drafted. Most LOIs are non-binding as to the transaction itself, with limited binding provisions (confidentiality, exclusivity/no-shop, expenses, and sometimes a breakup provision).

8In an asset purchase, the buyer typically:

A.Acquires all liabilities automatically

B.Acquires specified assets and assumed liabilities, leaving non-assumed liabilities with the seller

C.Acquires equity only

D.Acquires goodwill separately and no assets

Explanation: In an asset purchase, the buyer acquires specified assets and assumes specified liabilities; other liabilities remain with the seller. This contrasts with a stock purchase, in which the buyer acquires the equity and inherits all entity-level liabilities. Asset purchases often have favorable tax treatment for buyers due to stepped-up basis.

9A stock purchase means:

A.The buyer acquires only the inventory

B.The buyer acquires the equity of the company and therefore all assets and liabilities

C.The buyer takes no liabilities

D.The buyer purchases only real estate

Explanation: A stock purchase conveys equity interests in the legal entity, meaning the buyer inherits all assets, liabilities, contracts, and history (known and unknown). Buyers generally prefer asset deals; sellers generally prefer stock deals. Indemnification and representations/warranties become central in stock deals.

10IRS Form 8594 is used to:

A.Report individual income taxes

B.Allocate the purchase price among asset classes in a taxable asset acquisition

C.Register a business as a corporation

D.File SAR reports

Explanation: IRS Form 8594 (Asset Acquisition Statement) is filed by both buyer and seller to allocate the purchase price among the seven asset classes (Class I through Class VII). The classes include cash, marketable securities, A/R, inventory, furniture & equipment, intangible assets (excluding goodwill), and goodwill/going-concern value.

About the CBI Exam

The CBI credential, administered by IBBA, certifies professional business intermediaries who represent sellers and buyers in the sale of privately held companies. Candidates complete approximately 60 hours of IBBA coursework (covering valuation, marketing, financing, deal structure, legal and tax topics, and ethics), pass the CBI exam at 70% or higher, commit to the IBBA Code of Professional Standards, and maintain active membership. Recertification every three years requires continuing education and continued active practice.

Questions

100 scored questions

Time Limit

3 hours (IBBA CBI exam)

Passing Score

70%

Exam Fee

$650-$1,200 (International Business Brokers Association (IBBA))

CBI Exam Content Outline

25%

Sell-Side Process & Marketing

Engagement letters (exclusive right vs. exclusive agency vs. open), teasers, NDAs, CIMs, buyer qualification, online marketplaces (BizBuySell, DealStream), confidentiality management

20%

Valuation

SDE, EBITDA, add-backs, rule-of-thumb multiples, DealStats and BIZCOMPS, industry multiples, customer concentration, stub period / TTM, broker opinions of value vs USPAP-compliant valuation

20%

Deal Structure & Tax

Asset vs stock, IRS Form 8594 and asset classes, 338(h)(10), non-competes, consulting agreements, working capital peg, earn-outs, escrows/holdbacks, cash-free debt-free, reps and warranties, indemnification, R&W insurance, rollover equity

15%

Financing

SBA 7(a) terms, seller financing and standby, earnouts as financing, bank debt, equity, personal guarantees, ESOP as alternative exit, 1042 deferral

10%

Legal, Regulatory & Industry

State business broker and real-estate licensing, bulk sales / sales tax successor liability, WARN, franchising (FDD, transfers), restaurants (liquor license, franchisor consent), healthcare (Stark, Anti-Kickback), professional services, M&A Broker Rule

10%

Ethics & Professional Practice

IBBA Code of Professional Standards, fiduciary duty, dual agency disclosure, confidentiality and non-circumvention, marketing ethics, broker opinion of value disclaimers

How to Pass the CBI Exam

What You Need to Know

Passing score: 70%
Exam length: 100 questions
Time limit: 3 hours (IBBA CBI exam)
Exam fee: $650-$1,200

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

CBI Study Tips from Top Performers

1Memorize SDE vs EBITDA — know add-backs (above-market owner comp, personal expenses, one-time items) vs improper add-backs (recurring marketing, replacement capex)

2Know the asset-class structure of IRS Form 8594 (Classes I-VII) and be able to identify Class VII (goodwill)

3Understand SBA 7(a) core mechanics: 10-year term (25 for RE), standby on seller notes, 10% equity injection, personal guarantee

4Study the typical deal structure: cash at close + seller note + earn-out; with escrow/holdback of 10-20% for 12-24 months

5Know the sell-side sequence: Prep/Valuation → Teaser → NDA/PoF → CIM → IOI/LOI → Diligence → Definitive → Close

6Know non-compete enforceability: typically 3-5 years, reasonable geography, stricter in some states

7Master customer concentration as a key value driver and common deal-killer

8Study the IBBA Code of Professional Standards and fiduciary duty obligations (loyalty, confidentiality, disclosure, care)

Frequently Asked Questions

What is the CBI credential?

The Certified Business Intermediary (CBI) is IBBA’s flagship certification for business brokers. It validates training in valuation, marketing, deal structuring, financing, legal/tax topics, and professional ethics, with a focus on Main Street and lower Middle Market transactions.

How is the CBI exam structured?

The CBI exam is a comprehensive multiple-choice exam delivered online at testing facilities year-round. Candidates must score 70% or higher. The exam tests the CBI body of knowledge — valuation, process, legal/tax, financing, ethics, and industry-specific topics.

What are the CBI experience and education requirements?

Candidates complete IBBA-approved coursework (approximately 60 hours covering the CBI curriculum), demonstrate active business brokerage experience, pass the CBI exam at 70%+, commit to the IBBA Code of Professional Standards, and maintain active IBBA membership. IBBA’s website lists current specifics.

How much does CBI certification cost?

Exam and course fees typically range $650–$1,200 total for members depending on the chosen path (standard vs. Fast Track). Non-members pay more. Additional costs include IBBA membership dues and ongoing continuing education for recertification.

How long does CBI recertification last?

CBIs recertify every three years via continuing education (CEUs) and continued active practice, along with ongoing IBBA membership and adherence to the Code of Professional Standards.

How long should I prepare for the CBI exam?

Most candidates plan 60–100 hours of study across the IBBA coursework plus independent review. Focus on valuation (SDE/EBITDA multiples, add-backs), deal structure (asset vs. stock, 8594, 338(h)(10)), SBA financing, non-competes and covenants, and the IBBA Code of Professional Standards. Complete 300+ practice questions and aim for 80%+ before testing.